It sounds like you have ADSL so if you dont have a router at the moment you will need to run the Xbox through the computer.
The Xbox is asking for a ip address as its not being issued one from a DCHP server (Techie)
You need to set the ip address of you lan card to something like 192.168.0.1 then set your xbox to 192.168.0.2, but you HAVE to have the cross over cable or it will not work !!!!
To be honest your best bet is to just get a router, as well as sharing your internet connection with out the need for your computer to be on for the xbox to work they also provide more protection than the standard firerwall.
If you need any help let me know Jim.
The following is from this web page
http://www.xboxmagonline.com/xbox/online/xboxlive_connected_3.htmlIts for the old Xbox but should be the same.....
Connect with a USB-based modem
You must use a Windows ICS connection if your modem is USB-based. You must already have an Ethernet NIC installed in your PC for this connection.
1. Before you connect any cables, turn off your Xbox console, cable/DSL modem, and PC. If you have an external modem, unplug it from its power source to turn it off.
2. Take your USB cable and connect one end to the USB out port on the modem. Then connect the other end to one of the available USB ports on your PC.
3. Take your Ethernet cable and connect one end to the Ethernet out port on the PC NIC. Then connect the other end to the Ethernet port on the back of the Xbox console. Most Windows ICS connections require a crossover (not a standard, straight-through) Ethernet cable for this, although some may require a standard cable. See your modem documentation for more information.
4. Turn on your modem and your PC.
5. Configure Windows ICS to share your Internet connection. For more information, see your Windows documentation.
6. Once ICS is configured, make sure that your PC can access the Internet.
7. Turn on your Xbox console with no disc in the disc tray.
8. From the Xbox Dashboard, choose Xbox Live. Or, play a game on your Xbox Live Starter Kit disc and choose the option for Xbox Live play.
If you see the Xbox Live screen, congratulations! You are connected to Xbox Live! Next, Sign Up for Xbox Live.
If your Xbox console can't connect to Xbox Live, the Xbox Dashboard provides an automatic network troubleshooter to help you connect.